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My Top 3 Crypto Predictions for 2023

My Top 3 Crypto Predictions for 2023

With 2022 drawing to a close, many crypto investors are eager to put the industry’s turbulent year behind them. After cryptocurrency prices skyrocketed in 2021, with the entire market approaching a $3 trillion valuation in November of last year, a series of high-profile blow-ups exposed the industry’s true risk, causing the market to lose more than two-thirds of its value this year.

Should investors abandon their digital asset investments? Given your personal risk tolerance, time horizon, and understanding of the cryptocurrency industry, only you can answer that question. But you can bet that the new year will be full of significant events. 

Without further ado, here are my top three cryptocurrency market predictions for 2023.

Bitcoin will lead the bull market 

The Federal Reserve has indicated that future rate hikes may be slowed, which could be a bullish sign for all risky assets. So, if cryptos recover sometime next year, I believe Bitcoin (BTC 1.84%) will lead the charge.

With a market cap of approximately $330 billion (as of this writing), Bitcoin is likely the first exposure to the asset class for both individual and institutional investors. The capital that has flowed out of the market this year is waiting for things to turn around, and new investors who have no position in any crypto could flock to Bitcoin if the market recovers. The fact that it is now so simple to buy Bitcoin is fueling this type of activity. Again, the central bank’s policy moves, the macroeconomic picture, and general sentiment toward digital assets all play a role. However, I am confident that as markets correct and prices begin to rise, Bitcoin will be among the first to soar. 

Another delay for Ethereum

The completion of The Merge transitioned the network from proof-of-work to proof-of-stake, which requires 99.95% less energy and sets the stage for improved scaling in the future. The crypto community applauded the upgrade, which was long overdue. In fact, most developers have been anticipating this moment since Ethereum launched in 2015. The next stage in Ethereum’s development cycle is the implementation of sharding, a feature that will distribute network load across the blockchain, resulting in significantly faster transaction throughput. Because blockchain technology is new and Ethereum is in uncharted territory, I believe sharding will be delayed. It was supposed to be released in 2023, but Ethereum’s official website now says “2023 to 2024.”

Vitalik Buterin, a co-founder of Ethereum, also added The Scourge to the network’s development pipeline. There are now six different stages Ethereum must go through in order to be fully completed, including the merge. Given the insane complexity of this new technology, I see more delays and possibly even more development stages being added to the mix.

Stricter regulation is on the horizon. 

As I mentioned in the introduction, a string of highly publicized industry failures, including the failures of Celsius, Voyager, Terra Luna, and FTX, demonstrate the critical need for clear and thorough regulations. These negative events have highlighted how complicated, tangled, and opaque many of the industry’s major ventures are. Legislators should strive to increase trust and transparency while also protecting investors. 

As a result, a tougher regulatory stance by the United States could be a positive development for Coinbase (COIN, 1.5%), which is based in the United States and has been a publicly traded company since April 2021. This means that, rather than circumventing US laws by establishing a foreign domicile, as crypto exchange FTX did, Coinbase is already operating within existing securities regulatory guidelines. This should strengthen its position as a reliable brokerage and exchange.

However, a patchwork of regulations from various agencies will not suffice. If the United States wants to be at the forefront of cryptocurrency regulation on a global scale, it must implement a unified regulatory framework. This will lay the groundwork for the industry to grow in the future.

As we approach 2023, investors should keep an eye on these three predictions.

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